Yak Yarn Consolidated purchased a new spinning machine for $19,320. It is estimated that the machine...
Yak Yarn Consolidated purchased a new spinning machine for $19,320. It is estimated that the machine will have annual expenses of $4,056, with a salvage value of $6,029 when it is replaced in 8 years. It will provide a benefit of $5,276 per year in saved utilities and labor. Assume an interest rate of 8% compounded annually. What is the present worth of this machine?
Homework Answers
NPW of machine = -19320 + (5276 - 4056)*(P/A, 8%,8) + 6029 *(P/F, 8%,8)
= -19320 + 1220* 5.746639 + 6029 * 0.540269
= -9051.82
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Yak Yarn Consolidated purchased a new spinning machine for
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